Mermaid Diagnostics was formed in 1998 to develop technology invented in the Wolfson Applied Technology Laboratory, a part of the University of Birmingham.

Initial development was supported by the Department of Health, and the company has more recently received significant investment from the Mercia Fund to enable the company to make the products commercially available. Birmingham Research and Development Limited have given strong support at all stages.

The company's products are created by adapting proven colorimetric assays to work in a low cost enclosure.

The patented testing device, SafeTube, keeps reagents discrete from each other until the time of the test and secured both before and after use, allowing for easy and safe disposal.

The first application of the technology is a test for smoking called SmokeScreen. It detects nicotine and its breakdown products, such as cotinine, to assess smoking habit by measuring nicotine intake.